Managing OHS & E in Troubled Times
State of the Market
Whilst there is debate in every corner as to the size of the impact the global slow down will have on Australia, there is consensus that we will continue to see reduced liquidity, reduced business and consumer confidence and an increase in our record low unemployment rate.
Business Response to Reduced Cash Flow
According to the Australian Industry Group (AIG) / American Express Survey – “Managing Cash Flow in Troubled Times” survey, only 12% of Australian businesses are likely to take on projects with an above average financial risk within rest of this financial year. 65% of the 354 companies surveyed cited a ‘cut back or greater control of their spending’ as one of their key strategies to manage cash flow concerns.
Assuming this is or will be a recession we are experiencing, it is likely to differ from those previously experienced. In the past any downturn has been met with dramatic slashing of jobs and unemployment rates hitting double figures. However there are unique demographic circumstances this time round, which could limit the impact on employment numbers. The spike in post war birth rates resulted in the baby-boomer generation, coupled with subsequent decades of decreasing birth rates means that we are now starting to experience a net loss of our workforce each year. That is, less people are joining our workforce than leaving it and, as more and more baby-boomers retire, this gap is likely to increase. Add this to the skills shortage we are experiencing and the smart money is on hiring and retaining good people, even in hard times. This view is supported by the findings of the aforementioned survey with 75% of respondents stating they will maintain or even increase their staffing levels.
Affect on OHS & E’
So what has all this got to do with managing OHS & E? Well assuming there is not a massive cut in the workforce, another tactic, often used in combination, is a reduction in what organisations see as as ‘discretionary spending’. Unfortunately most organisations take a short term view of this and the first and hardest hit is training and professional development. Another common strategy is the delay of capital projects. Both of these areas can impact on work health & safety and environmental management. Managers and Supervisors miss out on the training and coaching they need to assist them in meeting their duties. Employee representatives go on untrained or unsupported. Capital expenditure requests to eliminate or control hazards, manage corrective actions or implement improvement plans are moved to the bottom of the pile. However, organisations who take this approach do so at their own peril. Compliance is not discretionary. In times when retaining a positive company profile, managing costs and avoiding risk are crucial, fines or prosecution can be catastrophic.
A Sound Approach
A sound approach to managing OHS & E in hard times is the exact same one used when times are good – Risk Management. By compiling a list of all potential actions, assessing the risk associated with each and prioritising, organisations are strongly positioned to ensure compliance as well as reduce risk profile. A long-term, sustainability strategy recognises that risk reduction not only increases organisational survival rates but also productivity. Furthermore, safe and healthy employees cost less, increase throughput, have reduced absenteeism and are more likely to be retained.
The good news is that more and more organisations are recognising this and risk management is no longer a fad but a way of conducting business. Furthermore, the AIG / American Express survey found that most organisations recognise that there are times when they require professional assistance to achieve risk reduction in a cost affective way. Even in these lean times 65% of those surveyed stated that they will retain the same level of ‘Business and Professional Services’ in the coming 6 months. In fact over 10% were planning to increase their usage of these experts. These organisations know that by partnering with high quality professionals they can achieve on-going returns. They also recognise that in a marketplace where in-house subject matter experts are hard to find and retain, maintaining a relationship with the right consultant(s) is crucial. If you would like to read some examples of our risk management assignments, click here.
If you would like to discuss how our expert OHS/WHS and Environmental Consultants can assist you and your organisation in reducing risk and/or develop your own people call us on 1300 657 279 or via email: contact us.